The film starts with the same opening scene from The Conjuring, in which two young women and a young man are telling the demonologists Ed and Lorraine Warren about their experiences with a doll called Annabelle which they believe is haunted.
In 1970, John and Mia Form live in Santa Monica and are expecting their first child. John gives her an expensive antique doll that she has wanted. That night, Mia hears sounds of a struggle as the next door neighbors, the Higgins, are murdered. When Mia calls the police, she is attacked by a man and a woman holding the doll. John and the police arrive and kill the man while the woman kills herself by slitting her own throat. A drop of her blood falls on the face of the doll. A news report identifies the assailants as Annabelle Higgins and her boyfriend. They are described as part of the Disciples of the Ram, a satanic cult that worships a demon with horns.
Since Annabelle was holding the doll while dying, Mia asks John to throw it away. Later during a mysterious fire, she trips over furniture while escaping and goes into labor. Mia gives birth to a healthy baby girl named Leah. The family moves into a new apartment and Mia finds the doll they thought they had discarded. More strange activity plagues Mia and her new baby. She contacts a police detective, who informs her of Annabelle Higgins involvement in the cult and their efforts to summon a demon by claiming a soul. Mia goes to a bookstore run by a woman named Evelyn and determines that the presence haunting her wants Leah’s soul. Evelyn tells Mia that she had a daughter named Ruby who died in a car accident caused by Evelyn. She was so guilt-ridden that she attempted suicide. She claims to have heard Ruby’s voice telling her it wasn’t Evelyn’s time to die.